Executive Summary of Key Regulatory Updates

According to the socio-economic forecast published on the official website of the Ministry of Economic Development of the Russian Federation on October 4, 2018, regulatory authorities will launch the Federal State Information System for Monitoring the Movement of Medicines. This track-and-trace infrastructure will monitor pharmaceutical products from the manufacturer to the end consumer using individual serialization (codification) and package identification.

The government has established additional criteria for excluding medicinal products from the List of Vital and Essential Medicines (VED), the list of high-cost medications, and the state-subsidized drug programs distributed to specific categories of citizens. A newly introduced ground for such exclusion requires a scientifically substantiated recommendation from the Chief Independent Specialist of the Ministry of Health of the Russian Federation, based on a comprehensive analysis of the drug's clinical and technical characteristics.

The newly enacted version of the Rules for State Registration and Re-registration of Scheduled Prices for Medicines Included in the VED List introduces several substantial statutory amendments.

The Federal Treasury of Russia has identified numerous compliance violations regarding the established procedure for determining the Initial (Maximum) Contract Price (IMCP) in public procurement processes for medical use pharmaceuticals.

The Federal Antimonopoly Service (FAS Russia) proposes to restrict the execution of long-term state contracts for the supply of medicines. Specifically, the agency intends to permit long-term public contracts exclusively for patent-protected medicines—subject to significant price reductions—and limit the duration of such contracts to either the expiration date of the patent or the market entry of a generic competitor sharing identical therapeutic indications.

1. Statutory Frameworks, Administrative Regulations, and Legal Updates

1.1. The Eurasian Economic Commission has approved the Rules on Information Interaction for establishing a unified database of issued licenses, permits, and expert opinions (regulatory clearances) in the foreign trade of goods, alongside the accession procedure and information exchange protocols for customs authorities of the member states of the Eurasian Economic Union.

Decision of the Collegium of the Eurasian Economic Commission No. 179 dated October 30, 2018, "On Technological Documents Regulating Information Interaction for the Implementation of the General Process 'Formation, Maintenance, and Use of a Database of Issued Licenses, Permits, and Expert Opinions (Regulatory Clearances) in Foreign Trade of Goods' via Integrated Information System Tools, Regarding Licenses and Permits"

This Decision of the Collegium of the Eurasian Economic Commission approves key regulatory instruments that will impact the formation of a unified database of import and export permits for pharmaceutical products issued to licensed corporate entities operating within the Eurasian Economic Union (EAEU):

• The Rules on Information Interaction stipulate that the competent authorities of the EAEU member states shall maintain national databases and submit data on issued licenses and/or permits to the Commission (the EAEU body that receives national registry updates from member states) dynamically as modifications occur. The Commission processes this data and provides national customs authorities with information on issued permits in accordance with the specific parameters defined in their electronic queries.

• The integrated information system will facilitate all electronic data exchange between the member states' competent authorities and the Commission, as well as between the Commission and EAEU customs bodies.

• The Accession Procedure outlines the core operational phases for EAEU member states joining the unified process, which includes: formal notification to the Commission regarding a new participant; enacting necessary domestic legislative amendments within six months from the start of the accession procedure; developing or upgrading internal IT infrastructure and ensuring its secure connection; migrating data sets used for the unified database of issued licenses and permits; and conducting comprehensive interoperability testing.

1.2. The Ministry of Economic Development of the Russian Federation forecasts enhanced consumer protection against counterfeit and falsified pharmaceutical products entering the market through 2024.

Forecast of Socio-Economic Development of the Russian Federation for the Period Up to 2024

According to the aforementioned forecast, released on the official website of the Ministry of Economic Development of Russia on October 4, 2018, the state will implement the Federal State Information System for Monitoring the Movement of Medicines from the manufacturer to the final consumer using individual serialization.

Effective January 1, 2020, individual serialization will cover all pharmaceutical products in commercial circulation to guarantee quality and safety while mitigating the risks of counterfeit entry.

The integration and formation of a unified pharmaceutical market within the framework of the Eurasian Economic Union will continue progressively.

1.3. EAEU Customs Classification Designates Gummy Dietary Supplements as Food Products.

Decision of the Collegium of the Eurasian Economic Commission No. 171 dated October 30, 2018, "On the Classification of Gummy Dietary Supplements in Accordance with the Unified Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union"

Gummy dietary supplements composed of sugar and/or sugar syrups, gelling agents, vitamins, and minerals intended for children's nutritional support fall under HS code heading 2106 ("Food preparations not elsewhere specified or included") pursuant to the Unified Commodity Nomenclature of Foreign Economic Activity of the EAEU, approved by Decision of the Council of the Eurasian Economic Commission No. 54 dated July 16, 2012.

1.4. Government Amends the Regulatory Framework Governing National Medicine Lists.

Resolution of the Government of the Russian Federation No. 1283 dated October 29, 2018, "On Amending the Rules for the Formation of Lists of Medicines for Medical Use and the Minimum Assortment of Medicines Required for the Provision of Medical Care"

The amended regulation stipulates that the formation of medicine lists must account not only for standard clinical guidelines but also for the outcomes of clinical trials evaluating preventive, diagnostic, therapeutic, and rehabilitative methodologies. Concurrently, the amendment repeals therapeutic equivalence to products with a similar pharmacological mechanism of action as a selection criterion for list inclusion.

Furthermore, the regulation introduces stricter criteria for excluding medicines from the VED List, the high-cost medication list, and state-subsidized drug programs. A new ground for exclusion arises from a scientifically sound recommendation by the Chief Independent Specialist of the Ministry of Health of Russia following a clinical performance audit. If a manufacturer fails to register its maximum selling price within six months after a drug is included in the VED List, regulatory authorities will remove the product from the list.

The Resolution also clarifies the protocol for incorporating fixed-dose combination (FDC) products. FDCs will join the national lists only if a comprehensive health technology assessment demonstrates superior clinical efficacy and cost-effectiveness compared to monotherapy options. Upon approval of a combination product, all registered single-ingredient components comprising that combination must simultaneously be included in the lists.

Finally, the submission of documents for a drug that received a formal rejection or exclusion decision from the commission within the current calendar year will serve as a new ground for dismissing an application.

1.5. Restructuring of Price Cap Regulations for Vital and Essential Medicines.

Resolution of the Government of the Russian Federation No. 1207 dated October 8, 2018, "On Amending Resolutions of the Government of the Russian Federation No. 865 dated October 29, 2010, and No. 979 dated September 15, 2015"

The restructured Rules for the State Registration and Re-registration of Scheduled Prices for Medicines Included in the VED List introduce critical updates. Notably, the revised framework adjusts the price registration rules for generic drugs produced by manufacturers within EAEU member states. Regulatory authorities will now enforce a single maximum manufacturer selling price for each dosage form, strength, and total pack count in secondary (consumer) packaging across all manufacturers specified in the marketing authorization, irrespective of the release form. When registering generic prices, the statutory Calculation Methodology (approved by Government Resolution No. 979) mandates the application of specific discount coefficients relative to the reference drug's registered price cap. This methodology now explicitly dictates that generic pricing must never exceed the registered prices of the original reference products.

Another vital procedural change requires an economic justification analysis for all price registration or re-registration filings, assigning enforcement oversight directly to the Federal Antimonopoly Service (FAS).

The protocol for upward price adjustments has become significantly more stringent. To obtain an upward re-registration, domestic EAEU manufacturers must submit detailed cost-accounting data showing raw material inflation affecting production and distribution, copies of supply contracts validating these cost increases, overhead variance calculations linked to utility tariff hikes (heating, gas, etc.), and depreciation schedules.

Foreign manufacturers must provide copies of commercial invoices for the specific drug, certified data confirming the manufacturer's selling prices in foreign jurisdictions, and customs declarations verifying import valuations.

1.6. Federal Treasury Flags Systematic Public Procurement Violations in Pharmaceutical Tenders.

Letter of the Federal Treasury of Russia No. 07-04-05/21-21405 dated October 8, 2018, "On Forwarding Aggregated Information on the Results of Control Activities"

The Federal Treasury has highlighted prevalent non-compliance with the mandatory pricing rules set out in Ministry of Health Order No. 871n dated October 26, 2017 (the "Pricing Order") governing public procurement of pharmaceutical products. Key infractions include calculating the Initial (Maximum) Contract Price (IMCP) while ignoring Value Added Tax (VAT) and wholesale markups. Additionally, procurement officers frequently set unit prices without applying the mandated statutory methods or, during re-tenders, used average historical prices instead of the lowest available market values, directly violating Paragraph 3 of the Pricing Order.

Consequently, the Treasury advises state contracting authorities to meticulously observe the Pricing Order requirements to avoid compliance risks and enforcement actions.

2. Draft Legislative and Regulatory Initiatives

2.1. Ministry of Health Proposes Amendments to Federal Law No. 61-FZ Regarding VED Pricing Protocols.

Draft Federal Law "On Amending the Federal Law 'On the Circulation of Medicines' in Part Regulating the Pricing of Medicinal Products Included in the List of Vital and Essential Medicines"

The draft legislation specifies that a manufacturer's registered maximum selling price may undergo an upward re-registration no more than once a year. Such applications must be submitted by October 1 of each calendar year. The bill also institutes mandatory retrofitting and re-registration of all manufacturer price caps approved prior to its enactment for VED products listed during 2018–2019, under a procedural framework to be established by the Russian Government.

These amendments are anticipated to codify the administrative measures previously introduced under Government Resolution No. 1207 at the federal statutory level.

2.2. Federal Antimonopoly Service Seeks to Amend Long-Term Contracting Provisions Under Procurement Law.

Public Consultations Concerning the Initiation of the Draft Federal Law "On Amending Part 29 of Article 34 of the Federal Law 'On the Contract System in the Procurement of Goods, Works, and Services for State and Municipal Needs'"

The proposal aims to limit the execution of long-term state contracts for pharmaceutical supplies. Under the draft rules, public authorities can execute long-term supply contracts exclusively for patent-protected drugs, contingent upon substantial price concessions. The operational duration of these long-term agreements will be capped by either the patent's expiration date or the market entry of an alternative drug with identical therapeutic indications.

FAS Russia asserts that these restrictions are essential to prevent anticompetitive barriers when generics emerge, maximize budget efficiency, incentivize generic market entry, and drive down prices for sole-source medications.

2.3. Expansion of the Statutory Biotarget List for Biosimilar and Biobetter Development.

Draft Joint Order of the Ministry of Industry and Trade of the Russian Federation and the Ministry of Health of the Russian Federation "On Amending the List of Biological Targets for the Development of Pharmacotherapeutically Similar and Improved Analogues of Innovative Medicines, Approved by Joint Order of the Ministry of Industry and Trade and the Ministry of Health No. 1605/308n Dated May 19, 2016"

The regulatory authorities propose adding the AGE/RAGE (Advanced Glycation End-products / Receptor for Advanced Glycation End-products) biotarget complex to the list, covering the following nosologies: diabetic nephropathy, diabetic cataract, diabetic retinopathy, diabetic mononeuropathy, diabetic polyneuropathy, and diabetic peripheral angiopathy.

3. Judicial Precedents and Regulatory Enforcement Practice

3.1. Supreme Court Reverses Lower Court Rulings on the Forgiveness of Accrued Public Procurement Penalties.

Ruling of the Supreme Court of the Russian Federation No. 305-ES18-10724 in Case No. A41-83159/2017 dated October 30, 2018

Asserting that a supplier breached its contract timelines for delivering Goserelin (a pharmaceutical product distributed to social welfare beneficiaries), the Ministry of Health of the Moscow Region issued an enforcement demand for accrued penalties. The supplier requested a complete penalty write-off under Part 6.1 of Article 34 of the Law on the Contract System, which was in force at the time of performance. The lower courts ruled in favor of the Ministry, relying solely on the confirmed fact of the delivery delay.

The Supreme Court of the Russian Federation, however, ruled that the lower courts failed to consider Part 6.1 of Article 94, which mandated that contracting authorities grant payment deferrals or write off accrued liquidated damages under conditions defined by the Government. The applicable framework, established by Government Resolution No. 190, obligated the customer to execute a penalty waiver if the supplier completed all core contract obligations (excluding warranties). The appellate court's finding that no grounds for a write-off existed directly contradicted the factual record. Consequently, the Supreme Court vacated the lower judgments and remanded the case for a new trial.

3.2. Regional Antitrust Authority Rules Against Tailored Technical Specifications Violating Procurement Catalogues.

Decision of the Novgorod Regional Office of the Federal Antimonopoly Service dated October 17, 2018

The procurement subject was a drug-eluting balloon catheter. The regulatory body concluded that the technical specifications impermissibly targeted a sole manufacturer by incorporating unique proprietary attributes, including exact catheter length, specific drug-coating configurations, and precise balloon dimensions. Furthermore, labeling the procurement object as a "Drug-Eluting Balloon Catheter" violated the mandatory Federal Catalogue of Goods, Works, and Services (KTRU), which prescribes the designation "Standard Balloon Catheter for Coronary Angioplasty." The contracting authority included excessive, non-KTRU-compliant metrics (such as drug release rates and length), creating anticompetitive barriers.

In practice, antitrust authorities assess proprietary specification challenges on a case-by-case basis. Key determinants include strict KTRU compliance and the extent of the state customer's deviation from public procurement laws.

3.3. Restrictive Packaging Requirements Overturned as Anticompetitive Barriers to Drug Substitution.

Decision of the Omsk Regional Office of the Federal Antimonopoly Service No. 03-10.1/311-2018 dated October 5, 2018

The technical specifications of the auction documentation required the supply of Tobramycin (INN) with highly restrictive parameters: a solution for intravenous and intramuscular injection, 40 mg/ml, 2 ml ampoules, packed as 5 ampoules per blister, 2 blisters per box. An evaluation of the State Register of Medicines revealed that only one product met these exact packaging and dosage metrics—manufactured by Teva Pharmaceutical Works Private Co. Ltd. All other alternative products under the Tobramycin INN utilized different formulations or packaging styles, proving the specifications were tailored to a single supplier.

As a result, the enforcement authority determined that the restrictive bidding parameters unlawfully prevented participants from proposing bioequivalent and interchangeable substitutes within the Tobramycin INN class.

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